The Communiqué (III-52.4.c) (“Amending Communiqué”) Amending the Communiqué on Principles Regarding Venture Capital Investment Funds (III-52.4) (‘Communiqué’) entered into force upon its publication in the Official Gazette dated 21.09.2024. The Amending Communiqué introduced significant amendments regarding venture capital investment funds (“VCIF”).

The Amending Communiqué replaces the investor information form with a fund issuance agreement. The fund issuance agreement will be concluded individually or collectively between the fund and the holders of participation shares and will contain the minimum elements listed in the fourth annex of the Communiqué. A fund issuance agreement shall be signed prior to the sale of participation shares to qualified investors. However, this obligation will not be required if the participation shares are purchased from the stock exchange. A copy of the fund issuance agreement will be sent to the portfolio custodian. A copy of the agreement will be made available on the Public Disclosure Platform page of the fund, and if the agreement is amended, the revised agreement will be announced through Public Disclosure Platform and sent to the portfolio custodian.

Prior to the Amending Communiqué, VCIFs could not be established as umbrella funds or basket funds. Pursuant to the Amending Communiqué, it is now possible for the VCIFs to issue funds under an umbrella fund by issuing a separate issuance document for each issuance of participation shares. In this case, all assets and liabilities of each fund will be separate from each other. Other requirements for the issuance of an umbrella fund or a basket fund are regulated in the Amending Communiqué.

Pursuant to the Communiqué, VCIFs could invest in venture capital companies established or to be established in Türkiye, or established abroad as of the date of investment, but at least 80% of the assets of which consisted of subsidiaries or affiliates established in Türkiye according to the latest annual financial statements. This ratio was reduced from %80 to 51% for companies established abroad.

The Communiqué already regulated convertible notes under the provision that VCIFs may invest in venture capital companies in the form of structured financing as a mix of debt and equity financing. The Amending Communiqué explicitly regulates that investments made through agreements that grant or will grant the right to become a shareholder in venture capital companies in the futurewill be considered as venture capital investments. Nevertheless, in order for this amendment to have an impact, convertible notes should be regulated as they can be used legally in the light of regulations such as the prohibition of the company’s acquisition of its own shares, thin capitalisation, usury offence, and unauthorised loan utilisation.

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